Big Deal evidence to MPs about dodgy price comparison sites

20th January 2015

An influential committee of MPs are investigating the behaviour
of price comparison websites. We have submitted evidence. Surprise,
surprise we've found more hiding of deals and dodgy practices.
Here's a summary.

Price comparison websites are a major part of the energy
landscape. They are household names who spend millions on adverts
of meerkats, dancing robots and fat opera singers.

The post-tax profits of the Big Five sites (Compare the Market,
Go Compare, MoneySupermarket, uSwitch and Confused) have quadrupled
since 2005 to £170 million in 2013.

These sites put themselves forward as impartial advisers and
'consumer champions'. But in reality they act dishonestly, steering
consumers towards those deals that earn them a commission and
effectively hiding those deals that do not earn them a
commission.

Research carried out by The Big Deal over 13 weeks, including
over 200 screenshots, found that the Big Five price comparison
sites all hid the cheapest deals from consumers, many for weeks on
end.

Several sites including Which? and Energylinx did the right
thing and stopped hiding deals immediately after the release of our
research in October 2014.

It wasn't until the second week of January 2015 that
MoneySupermarket and Confused also stopped hiding deals.

But three out of the Big Five switching sites have refused -
Compare the Market, Go Compare and uSwitch.

New Big Deal research shows that uSwitch - the biggest energy
switching site - has been hiding the cheapest deal for the past
three months and recently, on the 5thJanuary, four of the top five
cheapest tariffs. This has cost the average consumer between £17
and £18.

Just as importantly, the Big Five comparison sites refuse to
publish how much commission they earn from each deal. Yet we have
demonstrated that different levels of commission seriously affect
their advice.

There is a direct link between the level of intermediaries'
commissions, the price of suppliers' tariffs and therefore the
level of consumers' bills. The higher comparison sites' commission,
the higher consumers' prices. That is why we need transparency on
the level of the comparison sites' commissions - it will force
comparison sites to compete.

Competition should service to drive down costs - and
commissions are a significant cost in the industry.

When Big Deal asked suppliers for zero commission, we delivered
a tariff that was cheaper than anything on comparison sites.

A lack of transparency around commission raises questions about
what these sites have to hide and further undermines trust in the
energy industry. Polling carried out by Populus shows that a
significant section of the public - 43% - are not aware that
switching sites charge commission.

As Tim Yeo, Chair of Energy and Climate Change Committee, said:
"It's important that there should be complete transparency. We have
at the moment a situation where there really is no trust from
consumers in dealing with energy companies and if we find that the
comparison sites, which have represented themselves as being
neutral, objective advisers to consumers, if we find they're
earning varying amounts of commission I think it's absolutely
essential that all those sites should disclose, to people who use
them, exactly how much commission they earn from any particular
transaction." (Radio 4 You and Yours, 22nd December 2014).

We believe that price comparison websites need to start acting
honestly and transparently. They should:

(a) automatically show all users all deals

(b) publish how much commission they receive from each energy
company for each tariff and transaction

Polling carried out by Populus shows that the public strongly
backs our view:

79% think price comparison sites should automatically show all
tariffs whether they receive a commission or not. Just 7 per cent
disagree.

74% think sites should say how much money they make in
commission from each energy provider. Just 5 per cent think they
shouldn't reveal this information.